Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 18

Mack, a dealer, sold Hudgens a used car on credit. At the time of the sale, Mack fraudulently informed Hudgens that the car was in good condition; in fact, the car needed extensive repairs. When Hudgens attempted to return the car to Mack within the thirty-day guarantee period, Mack refused to take the car back. In the meantime, Mack had assigned Hudgens's contract to Universal CIT Credit Corp. When Hudgens refused to pay on the contract, Universal CIT sued him. Hudgens's defense was that he had the right to set aside the contract based on fraud. Was Hudgens correct? (Universal CIT Credit Corporation v. Hudgens, 356 S.W.2d 658)